Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Jules B. Garfunkel who wrote (39577)	11/8/1997 11:58:00 AM
From: Paul Fiondella	Read Replies (2) \| Respond to of 186894

Inventory adjustment, a one time phenomenon? With the beginning of the Christmas buying season, the newspaper advts. are showing plenty of sub $1000 166MMX, IBM (Cyrix) 200Mhz computer systems for sale. In one retail advt. I see an IBM 200MHz, with CD ROM, sound card and monitor for $799. Intel may have shipped the low end chips out the door and closed down production in June but it would appear they are still out there in volume in the channel. Glut Glut GLut. ====================== By the way which consumer is going to buy all of these PII's at over $2000 when so many systems are available for half the price.

To: Jules B. Garfunkel who wrote (39577)	11/8/1997 12:02:00 PM
From: Jules B. Garfunkel	Read Replies (2) \| Respond to of 186894

Paul, and All. Please disregard my previous post. I'm sorry but I ran out of time while editing it. The edited version follows. Sorry. Paul, I call your attention to my, exchange2000.com In that post I gave my interpretation of Intel's Q3 results. I opined that the shift to JIT, or 'the build to order" manufacturing model, was a one time OEM phenomenon. I estimated the shift had caused a reduction of $.05+ to Intel's Q3's earnings. Therefore, earnings I believed, were actually $.02 better than the First Call estimates, rather than the $.03 earnings shortfall, that was reported. "---Intel's raw materials inventory and finished goods inventory were actually down sequentially in Q3, despite revenues increasing sequentially. The only reasons that I can come up with for this phenomenon was that Intel made an inventory adjustment in the quarter. This I believe was done so as to accelerate moving out older classic Pentium's, and to adjust to their OEM's new "build to order" manufacturing model, (i.e. CPQ following a Dell method of manufacturing). Further evidence of this can be found in the decrease of Intel's average-days-sales-outstanding, by 4 days, to 43 days from the previous quarter. Therefore, both of these reasons would seem to suggest that the inventory adjustment was an aberration and a one time event that should not carry forward into future quarters. In my estimation the 9 % reduction in average-days-sales outstanding probably accounted for another 5 cents in Intel's earnings shortfall for the third quarter." I have often discussed on SI, my opinion that the job of the long term investor is to identify aberrations in "the market". By that, I mean, that investors should look for when "the market" misinterprets a past or future event. I believe this was the same thing that Ibexx was saying yesterday in her post #39506 , recommending investors focus on the long term fundamentals and not short term market fluctuations, or manipulations. Therefore, as I have posted over the last week, with Intel at an unprecedented and relatively low price, I have been buying INTC Calls, trying to take advantage of the fact that I believed that analysts had misinterpreted Intel's inventory situation. This misinterpretation has now, hopefully, been clarified and rectified by Intel. Going forward analysts should recognize that JIT manufacturing was a short term, one time, phenomenon. An event which over time shoul have a positive impact on Intel, and was in no way an indication of weakening demand, (as was almost universally interpreted by other analysts). Regards, Jules